Tax Break

Essential reading: How Romney avoided a controversial tax practice, and more

September 5, 2012

Welcome to the top tax and accounting headlines from Reuters and other sources.

 * How Romney avoided controversial tax practice. Mark Maremont – The Wall Street Journal. Mitt Romney appears to have dodged a bullet after his lawyer said last week that the GOP candidate never engaged in a tax practice that’s now being investigated by New York’s attorney general. The statement, however, created another mystery: How did Romney avoid getting involved in a tax practice that appears to have been widely used in recent years at his old firm, Bain Capital? Link  

* Facebook says no secondary offering to cover tax bill. Alexei Oreskovic – Reuters. Facebook Inc promised not to sell stock to cover a nearly $2 billion tax bill and said it will allow employees to cash in their stock weeks ahead of schedule, moving to soothe nervous investors and its own staff as its share price spirals downward. The world’s largest online social network company, which has lost more than 50 percent of its market value since going public in May, said on Tuesday its total shares outstanding will be reduced by roughly 101 million shares as a result of the move. Link  

* Reid renews attacks on Romney’s tax disclosures. John McKinnon – The Wall Street Journal. Senate Majority Leader Harry Reid renewed his hard-nosed attack on Mitt Romney over the Republican’s personal taxes, during an appearance at the Democratic convention Tuesday. This time, though, Reid seemed to pull a couple of his big punches. Notably, Reid didn’t repeat his well-publicized charge that Romney hasn’t paid any taxes for a decade, perhaps because Romney has categorically denied that charge. Link  

* U.S. state growth tied to tax, welfare policies, Fed study shows. Reuters. States with simpler tax codes and lower welfare payments have stronger wage and employment growth than other states in the union, research published Tuesday by the U.S. Federal Reserve Bank of San Francisco showed. The findings, published in the San Francisco Fed’s latest Economic Letter, suggest that state policymakers can goose economic and job growth by fostering a better business climate as measured by taxes and other costs. Link  

* The bullish case for dividend stocks. Jonathan Burton – The Wall Street Journal. Don’t give up on dividends. The possibility of an increase in the tax on stock dividends next year will kick up a lot of dust in the next few months about the diminished value of these payouts in that scenario—and about the threat of share prices tumbling as dividend stocks fall out of favor. Link  

* What’s at issue in the private equity tax inquiry. Victor Fleischer – The New York Times opinion. Management fee waiver programs are complicated. At issue is whether, through these Byzantine programs, private equity executives are improperly using pretax dollars, rather than after-tax dollars, to invest in their own funds. Link

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